Financing your export business
Winning an export order or contract is hard work, but the work does not stop there. Making sure your business can fund the contract, and making sure you get paid by your customer, are key issues that every exporter faces.
Source your capital
Exporting can also be financially demanding. Customers often want credit from the time they receive the goods. For a long distance shipment, this could be weeks after you produced and shipped the goods, so you get paid later than you would by a customer in your local market. At the same time, you may have to meet extra costs like transport and insurance.
The more successful you are, the greater the demands placed on your business will be. It is worth planning ahead to be sure you have the capacity to handle the extra production, selling and after-sales support.
Budget for export
Your export budget will be largely determined by the countries or markets you are targeting and the products or services you are exporting.
An export budget should cover all the costs you are likely to incur when marketing your products or services offshore, as well as the costs needed to run your export business. Allowances should be made for:
- Marketing and market entry costs such as:
- Regular visits to your target markets
- The provision of samples
- Potentially hiring a dedicated export manager if the owner of the business or sales manager does not have the time to cover this role
- Working capital:
- The reality is that payment for most export contracts is received by the exporter after delivery of the goods or service
- This means that for products, production costs such as raw materials will need to be purchased prior to you being paid by your customer. Delivering services may not incur such significant input costs; however, some outlay is usually required before receiving payment as well.
A wide range of funding options now exists, with various grants, venture capital and equity-sharing deals increasingly commonplace. However, banks remain the easiest and most approachable method of gaining access to funding, while most banks also offer tailored services for exporters.
Food Trade Affairs can help you make a wise choice, please contact us at Info@FoodTradeAffairs.eu